CSR 2010: How big is the benefits bill?
Today the Chancellor stated that the welfare bill is £200 billion. The cost of Child Benefit (around £12 billion), Tax Credits (around £27 billion) and DWP administered benefits and pensions (£151 billion) comes to £190 billion. There may be something that I am missing. Or there may have been a slight inflation of the figures. But either way my gripe with the Chancellor is not over a missing £10 billion – I am more concerned about his conflation of every single social protection payment into an ill-defined ‘benefits bill’.
The reality is that that majority of the welfare bill is spent on payments to pensioners or to children – for example our Economic Report shows that 60 per cent of DWP’s social security bill is accounted for by payments made to people of state pension age, 13 per cent by payments to disabled people, and a paltry 2 per cent for those who are unemployed. In addition, while the Chancellor is keen to paint a picture of ballooning welfare spending, the growth in costs is a direct result of the increased number of pensioners – while state spending on older people has seen significant real terms increases in recent years, over the same period real terms spending on benefits for unemployed people has been falling, with the real terms value of JSA now worth the same as it was in 1997.
While there was much talk today of ‘fairness for the working families who pay for it [benefits] from their taxes’ the reality is that it is impossible to cut welfare on the scale set out today without reducing the entitlements of the same households (given that pensions are protected). Hence cuts in areas including childcare, in-work tax credits and disability benefits (only accured by those who have built up NI contributions) mean that the new deserving poor – ‘working families’ – are taking the hit.